There have been many discussions within the wine industry about maximizing the tasting room as a significant source of revenue in addition to giving visitors real value. The industry’s move to improving a visitors experience is underway and consumers seem to appreciate a more civilized wine experience.
Still, an essential part of the tasting rooms’ potential is promoting the wine club and converting the tasting experience into buying wine direct from the source. Additionally, the tasting experience is a critical element for overall branding of any wine and winery. In the final analysis however, the sole purpose of wine making is to sell the finished product at a profit.
A quality experience at a tasting room can be a big driver toward profits. Here the emphasis should be on quality (quality being defined as the overall experience). Paul Selden said about quality, “the influence of quality is not only the purview of manufacturing; it now extends into the service sector and into areas such as sales, marketing, and customer service.” Maybe we are starting to see a stampede toward quality in tasting rooms.
For a winery, a quality experience translates into tasting room visitors, wine sales and wine club memberships (retained and new sign-ups). For the visitor, quality is: personalization, ambiance, the search for the ultimate wine, value received, and knowledgeable hosts, and services offered by the winery (newsletters, private facilities for intimate tastings, etc.). The Wine Business Monthly/Silicon Valley Bank 2015 survey of tasting rooms show that “nearly one in three wineries, offer seated tastings of some sort and the seated tastings are associated with higher average purchases.” That to most wine folks is a trend.
There are a lot of factors that dictate the effectiveness of tasting rooms relative to maximizing sales: size of the winery, tasting room accommodations, staff and facilities costs, and whether wineries use Three Tier Distribution for off-site sales. (The latter point is also the main driver in wineries selling more wines direct-to-the-consumer.) Even when a winery must conform to a “by appointment only” tasting room policy, sales at the winery are getting a lot of attention and respect as a channel of distribution. One such measurement is year-over-year Direct to Consumer shipment which is growing at approximately 15% annually in some wine regions.
There are many wineries that produce great wines that the consumer will never see on the shelves at Total Wines or BevMo or a great local wine shop or even at a restaurant. These are wines sold directly to consumers at the winery or on the winery’s website or via a winery’s own wine club. Most likely these wines were introduced through a tasting or friends recommendation. A small winery I like to visit started in Dry Creek and to this day only sells wines to consumers who find the winery at the very end of a gravel road; a nice product and service experience is worth traveling down an old country gravel road.
Digressing for one moment, I want to explain how I am analyzing tasting rooms as a marketing tool for wineries. Even now some tasting rooms are being rebranded as Hospitality Centers. Whatever the name I like the wine industry and how it is evolving and would like to offer a discussion on ways to improve their processes that increase sales and reduce cost in marketing wine. Quality assurance is now becoming a new standard.
In 1976 I was involved with a Deming Program to improve sales in a service industry company with more than 43,000 employees and later with a process improvement effort when I was in the U.S. Navy and they were implementing an “in-house customer” concept. Fighting the quality/process improvement program initially, I finally realized that process and quality improvements do increase sales, reduce costs and improve internal relationships that will also improve how customers perceive the company and see increase value.
The wine industry seems to be dropping or modifying the long tasting bar, with elbows flailing in an endless fight for room, splashed pouring, loud conversations and cash registers ringing. This may be because the majority (nearly 50%) of wine purchases is from Boomers (50-69 years old) and they are not responding to an environment that is from the 60’s. They are also the buyers of fine wine (wines priced over $20/bottle) which represents 50% of all such sales. The 35 to 49 year olds (Millennial’s) are the second largest fine wine market buyers. (Source: Silicon Valley Bank)
Approaching tasting rooms as a quality improvement opportunity is a great opening to the target market demographic as noted above. It improves sales, brand loyalty, brand awareness, improves the wine product, increases sales and reduces cost. It appears that wineries taking a quality improvement approach to their tasting room experiences increased in yields. So, let’s discuss the trends in tasting rooms. From a winery perspective, to get started it only takes initiative, imagination and commitment because it isn’t a quick fix but it will have some impact almost immediately.
Recently, my company introduced a new product that utilizes quartz for coasters and tabletops. The unique feature is that these quartz applications can be permanently imprinted with most any image. So a natural source for sales is winery tasting rooms. For the past couple of years I have visited many wineries to introduce our product to tasting room managers. As a result I have been noticing some major changes in winery tasting rooms. These changes are in the form of tasting room design, approach to the visitor, presentation of the wines to the visitor, caliber of tasting room staffs, emphasis on sales and winery branding.
A discussion of a “quality improvement or process improvement” approach in winery tasting rooms and commitment to reaping the benefits of such is not an esoteric discussion; it has proven results since Dr. Deming launched the quality improvement movement in Japan in the late 1940’s. (The program has given the market such high-end products as the Lexus, Infinity, Honda Jet, Sony, etc.) Process improvement programs are not just about manufacturing, it also applies to corporate sales, marketing and products. But, let’s stay focused on designing and delivering a “quality” experience in the winery tasting room; which I think is the wave of the future for direct selling of wine. Working with distributors, retailers and restaurants is a slightly different dynamic for a winery when delivering “quality” and selling to those outlets greatly diminish yields.
Back to my epiphany from the past few years in visiting tasting rooms across Napa, Sonoma, El Dorado and San Joaquin Valley’s. A quality system approach to tasting room presentations is already a reality in a few wineries and it isn’t showing up in just the very high-end wineries; many are taking a quality improvement approach in the mid-range market wines-$12+ a bottle wine.
Taking advantage of the new tasting room presentations isn’t a one-way experience; the consumer needs to prepare for a fruitful tasting experience. To maximize the experience of a wine tasting at a winery the consumers should do some fundamental prep work prior to a visit:
- Do research on the winery relative to history, the wines offered, awards and is it a privately owned winery.
- What does their website tell you subliminally about their approach to the market?
- Is it a “by appointment only” tasting or what the hours the tasting room is open are.
- Where do they sell their wines-retail, restaurants, in-house club, etc?
- What is the tasting format: bar, private seating, combination of both, tasting flight, and cost?
- If they have a Wine Club what are the arrangements?
- Determine if you can visit on a weekday.
- Do not plan on a scorched earth approach by trying to break a record on the number of wineries visited on one day.
- At the tasting, take notes that will make sense to you when you revisit them later in the month or year.
- If you pay for a tasting do not feel obligated to buy a wine. (Most quality tastings are fee based and are not refundable with a wine purchase, which should be perfectly acceptable.)
- Send a note via e-mail to give the staff feedback on your experience. Feedback is critical for a tasting room manager trying to institute a quality approach to the brand.
I have never seen a “quality improvement” fail in either a manufacturing or a service industry. But, yes I have seen a company fail to implement a quality program in a successful manner. Initially, implementing a quality program can be expensive, but the dividends come back in increased sales, brand recognition, and higher price points on wines sold using a quality approach at a tasting room level. Remember, the tasting room for a winery is the first and often last customer contact a winery has and that impact can be long lasting and far reaching.
What are some of the trends now showing up in the quality improvement approach to tasting room experiences? First, it is all about the customer, the tasting room is where the wine is introduced, relationships established, and wine being bought and showcased. Everybody’s tastes are different and that is why each winery has a product approach that fits their target market. Therefore, the consultative selling is all about introduction and establishing each wines approach-acids, tannins, aromas, and taste. A one size fits all approach to this process does not work. Customers will pay for product or services that they need or want and that gives them real value. This is what defines quality.
The evolving tasting room trends touch on facilities, personnel, design/atmosphere approaches and personalization. Recognize that there are nuisances within each, but getting to deep at this point as a customer is somewhat a waste of time.
Facilities need to be about changing styles relative to look and feel; not so much as a retail location, but rather to support the branding strategy of the winery. Signage appears to be much more professional and inviting. The restrooms are clean and fresh and well lit. Answer the question: is there sufficient room to accommodate the tasting visitors? Lastly, the facilities, outside and inside, are they in good repair? Tasting room facilities should take advantage of the customary work of making wine which tends to fascinate visitors. People seem to appreciate seeing interaction of winery workers, tasting staff and even grounds keepers-they tend to feel a part of the operation.
The hard task of creating an inviting atmosphere is an elusive component in implementing any quality improvement program in a tasting room, because it must be commensurate with the branding strategy of the winery. Any conflict with atmosphere relative to the consumer experience must be avoided. Much has been written about atmosphere that ultimately will impact our perception of a wine’s taste and quality.
Ultimately, atmosphere considerations include:
- Layout and design of the interior space
- Background music
- Ambient noise levels
- Other visitors
Basically, considering the demographic profile of a customer, research shows they are gravitating to quality services and environment; the traditional “belly up to the bar and slap down $10 and start drinking” is not the productive approach to selling fine wines and creating new customers while retaining current customers. Further, tour buses at a venue are not necessarily bad but they can negatively impact a target customer base. If the tour bus crowd is a winery’s market then apply a “quality improvement” to that customer category. It isn’t only the wine snobs that look down their collective noses at the disgorging of tour bus passengers as impacting the quality experience. However, that does not diminish the fact that a tailored quality service process can accommodate all customers.
Another iteration in upscale approaches to tasting rooms seems to focus on seated tasting arrangements and less of a stand-up bar. Here the service is brought to more intimate settings of 2 or slightly more people. Single tastings can be/are handled at a less formal bar. A concierge/host comes to you and explains what the tasting experience at their winery is all about and a host/associate brings the wine to you to taste. My experience with this format is that it is casual, the people are well informed about the various wines, they are not overly formal, and they leave you to taste and talk about the wine; a nice touch of quality.
At the heart of any quality process in a tasting room/hospitality center is certainly the personnel; they deliver on the strategy, they are the customer/guest contact people for the winery, they depict the winery brand, they present the product and yes, it is the tasting room that sells the product.
Moving to a concierge service format is really about selling the wine in a format that gives the consumer a feeling of value, entertainment, loyalty, imparting knowledge and a feeling that the customer matters. The feeling of “matters” comes from relevant, personal and engaged conversation, eye contact, getting to understand the individual customers, and having staff that displays a comfortable knowledge of the wine and wine business. As an aside, I remember the gentleman who did our tasting at a private table overlooking the vineyard, his name, where he last lived and where he lives now and his wife’s name and his favorite wine. Further, when we left with our several hundred dollar purchase he remember our name, walked us to the door and insisted we call him next time we visited Napa. Yes, we will return because the experience from the parking lot attendant, to the lady greeting us at the arrival, to our departure, we felt appreciated, listened to and the atmosphere was unparalleled.
To commit to a quality process in the tasting room recognize it is a team effort throughout the winery, for the goal is to sell at a profit and reduce the cost of the sale. W. Edwards Deming, the father of quality improvement said, “Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.” Do visitors boast about service and product after visiting a tasting room? If they don’t, over time, they will run out of customers. More recently I am finding I recommend and re-buy brands from wineries where the tasting room/hospitality center impressed me immensely; I was made to feel welcomed and as a VIP.
Getting good tasting room staff is somewhat of a problem. The highest paid tasting room staff in Napa makes $18 per hour and Sonoma the rate is $14 per hour, and the lowest is in Washington at $10. For that compensation the staff must know and understand wine making so as to communicate with the high-end Boomer generation customer who buys an average of $214 worth of wine in a Napa winery, convent those customers into wine club members who will spend $1,023 annually and create repeat visits. The source of this information is Silicon Valley Bank who does a very comprehensive study of the industry nationwide.
But don’t think once a wine club member is always a wine club member. In reality, people only stay a member in a wine club for about 2 years and then move on. With a conversion rate of 7% of winery tasting room visitors signing up for a wine club, it is easy to understand the complexities training and keeping staff.
I first visited Charles Krug and Robert Mondavi in the late 60’s and both were nice “bar” oriented tasting rooms; albeit Mondavi was very new and shinny. I do not recall a wine club and Direct to Consumer shipping program (state laws have vastly changed since then), so when you arrived at the San Francisco Airport to return home it seemed like everyone was toting a 2 bottle box of wine from some winery. Looking back a few decades, the tasting room experience was that of a crowded, noisy, not professional atmosphere, and most ended with a walking tour through the winery and out the door. In those days marketing techniques and demographic customer data was very rudimentary.
Today the mainstay of the wine industry are the maturing crowd that have grow up with wine and appreciate a personalized approach from tasting rooms and winery personnel. Quality is now part of the public’s everyday existence; quality is understood, demanded and appreciated. Approximately 70% of wine in America is purchased by consumers over 30 years old that are classified as frequent wine consumers. The consumers buying club memberships, sold in a tasting room, are the crème da la crème of wine consumers for a winery. Do these premier customers feel they are VIP’s? They need to be because the most costly customer to acquire is a new one, so these visitors must be treated as VIP’s.
The trend with more affluent visitors (for sake of discussion let’s say 40+ years old) are now the type that want private seated tastings. Some wineries (where they have zoning options) provide: food paired tastings, bar seating tastings, private seating, and wine club member tasting areas. Obviously, the operative word for these options is “personalization” options for all visitor categories. Per the Silicon Valley Bank, a private seated wine tasting customer will purchase $392 worth of wine. While at a standing tasting bar the purchase is $75. Now, who says quality won’t win out?
Personnel in a tasting room (part-time or full-time) need constant training in all aspect of product and customer contact relationships. Customers will always have questions and they want expert answers and expect to be sold. Anybody can pour a taste and hand out tasting notes on an 8.5″ x 11″ piece of paper, but enthused customer oriented staff sell the wine.
Tasting rooms with a quality improvement orientation are really about consultative selling. Always being mindful to make it possible for their customers to take joy in the products and services and then tell others about it. The upper range of Millennia’s and all the Baby Boomers are the consistent wine drinkers and account for more than 50% of the fine wine bought in the U.S. This market buys quality products and services, so a luxury product like wine should be presented in a way that is in their comfort zone.
We have all had the opportunity to buy great products or services but didn’t buy because of the way we were treated or talked to by a customer contact employee. My ‘hot button’, when approaching a tasting experience, is how I was received when I enter a winery. Was I welcomed with sincerity that was appropriate? Was the tone or feeling of the room less hurried and respectful of my time; not rushed? Most of us want to feel like we are the most important customer arriving to taste wines. We expect to pay for the service at a level that allows the winery to make it personal, memorable and valuable and not like a DMV experience.
Most tasting experiences I have had lately are $20 for about 5 wines; the tasting fees were not refundable, even with a purchase. And that is no problem if the experience is great. Continuing, there are 22 ounces of wine in a bottle and based on traditional retail, that bottle probably costs about $10 to $15 to produce. So at a 1 ounce tasting times 5 (different wines) I will consume 5 ounces of wine for $20. Those bottles represent 3,750 total ounces of which I consumed 5 ounces. I estimate each ounce cost the winery about $0.70 for which I paid $4.00.
My point in the above analysis is the fact that these experiences are well worth it to me and my wife because I have spent more money on other events that turned out to be a disaster. $20 was spent at a Napa winery that greeted me and my wife by name, the environment was superb, the wine was excellent, never pressured to buy or join anything, had a private tasting, the facilities were warm and open, and Paul (host) was friendly yet respectful. Yeah, we bought wine because the wines suited our taste.
Whatever the moniker: quality service improvement, personalization, or quality commitment, a winery must focus on quality to get to the next level? If they don’t address issues of quality, sales will go to the perceived value winery experience. The job of improving quality should never be finished only improved upon to ultimately impress and create a long-term customer.